KAZAKHSTAN Law and Practice Contributed by: Assel Ilyassova, Lyazzat Zhilkibagarova and Makhabbat Mukhidinkyzy, GRATA International
5. Anti-Avoidance and Anti-Evasion Measures 5.1 Definition and Identification of Tax Fraud, Evasion, Tax Avoidance and Abusive Schemes Kazakhstan law does not contain a single legal defi - nition of tax avoidance or abusive tax arrangements. Instead, such situations are assessed through a com - bination of specific legal mechanisms, including anti- abuse provisions of international tax treaties, transfer pricing rules, mechanisms for challenging fictitious transactions, and others. Tax evasion is treated as unlawful non-compliance with tax obligations and may give rise to administra - tive or criminal liability for a tax agent in cases of fail - ure to withhold or partial withholding of tax from non- resident income. Tax fraud does not have a separate unified definition and is usually addressed through general liability mechanisms applicable to unlawful evasion and fictitious transactions. In cross-border situations, the main indicators of abuse typically include treaty shopping, lack of ben - eficial ownership and non-compliance with the arm’s length principle. 5.2 Anti-Avoidance Mechanisms Kazakhstan combats tax fraud, evasion and abusive practices through the following mechanisms: • transfer pricing control over related-party and cer - tain cross-border transactions; • controlled foreign corporation (CFC) rules; • thin capitalisation rules limiting interest deductibil - ity in transactions between affiliated parties; • beneficial ownership and principal purpose test requirements for access to double tax treaty ben - efits; • restrictions on deductions for transactions lacking business purpose; • increased tax exposure on transactions with low- tax jurisdictions; and • challenging fictitious transactions.
5.3 Blacklists and Non-Cooperative Jurisdictions
Kazakhstan maintains an official list of jurisdictions with preferential taxation (often referred to as “low- tax” or “offshore” jurisdictions). If Kazakh taxpayers interact with entities or individuals registered in such jurisdictions, the tax consequences may include: • limitations on deductions; • withholding tax implications (an increased with - holding tax rate compared to the same type of income received by a foreign entity or individual not registered in a preferential jurisdiction); and • increased scrutiny by the Kazakh tax authorities. 5.4 Reporting Obligations and Disclosure Regimes In Kazakhstan, the key reporting obligations to detect and prevent tax fraud, tax evasion and/or tax avoid - ance include: • tax returns and financial statements; • transfer pricing documentation for controlled trans - actions; • CFC reporting by residents; and • country-by-country reporting (CbCR) for qualifying multinational groups. 5.5 Role of Tax Authorities and Enforcement Measures Kazakh tax authorities have broad investigatory powers in relation to tax non-compliance. These include desk and field tax audits; the power to request accounting, banking and transactional records; access to taxpay - er premises during audits; and information exchange with domestic and foreign authorities. They may also bring taxpayers or tax agents to administrative liability within their competence, while cases involving indica - tions of tax crime may be referred to law enforcement authorities. Unannounced visits, searches and raids are generally conducted only in the context of criminal proceedings, with the involvement of law enforcement bodies rather than the tax authorities acting alone.
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